CESTAT upholds Revocation of Customs Broker’s License on failure to produce KYC Documents of Exporter at any Stage of Inquiry [Read Order]

KYC- Customs Broker’s License - Taxscan

The Chennai Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT)  upheld the Revocation of Customs Broker’s License on failure to produce KYC documents of exporter at any stage of inquiry.

The appellant, M/s Prabhu Shipping Systems is a licensed Customs Broker, is aggrieved by the Order-in-Original passed by the Commissioner of Customs, Chennai holding that the appellant had contravened Regulations 10(b), 10(d), 10(k), 10(n) and 13(12) of the Customs Brokers Licensing Regulations, 2018 and revoking the appellant’s licence under Regulation 14 read with Regulation 17. The security deposit furnished by the appellant was also forfeited and a penalty of Rs.50,000/- was also imposed upon the appellant under Regulation 18 of CBLR, 2018.

The appellant was licensed as Customs Broker by the Commissioner of Customs, Tuticorin but it also operated in Chennai and Mumbai Commissionerates under Form C procedure. Customs Brokers licensed by one Customs House can operate in other Customs Houses under this procedure. The appellant filed 33 shipping bills in the name of “M/s. Sunrise Enterprises, Ghaziabad” to export “Ratcheting spanner set and water saving aerator foam flow” declaring abnormally high price allegedly to claim excessive IGST refund. The CIU of Mumbai Customs detained the goods, recorded the statements of Shri Harichandra Pandurang Kadam, G-card holder of the appellant. They also recorded the statement of A. Prabhu, partner of appellant.

The appellant filed of shipping bills in the name of an exporter without even contacting the exporter and without verifying their KYC documents but by simply accepting the documents provided by Mr. Kohli who was neither the exporter nor an employee of Customs Broker nor the Customs Broker himself. The prices of the export goods were grossly overvalued with the intention to claim excessive IGST refund.

The coram headed by the President, Justice Dilip Gupta and Technical Member, P.V.Subba Rao while upholding the impugned order noted that the appellant had no idea who the exporter was. Its employee, Shri Kadam, also had no contact with the exporter. The appellant or its employee has not conducted any due diligence measures. They claimed to have obtained KYC documents through email but have failed to produce them either before the Inquiry officer or at any stage. The irresistible conclusion can only be that they have no such documents and also no idea of who the exporter was and simply filed a Shipping Bill heavily over-invoicing the goods.

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PRABHU SHIPPING SYSTEMS vs COMMISSIONER OF CUSTOMS

Counsel for Appellant:   P. Raja and P. Kumanan

Counsel for Respondent:   Smt. T. Ushadevi

CITATION:   2021 TAXSCAN (CESTAT) 127

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